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A fiscal debate gets physical in the Upper House. China and Argentina make up over the soy oil saga. The economy reaches record (nominal) growth, although inflation is rising. Plus, the nation watches the rescue of a girl trapped in a well, and the president declares wine the national drink.
A congressional budget battle ended in a brawl last week. Opposition legislator Graciela Camano slapped fellow lawmaker Carlos Kunkel on the mouth during Upper House's debate over the contentious government budget bill. Two television channels broadcast the slap live.
Kunkel, a close ally of President Cristina Fernandez, was mid-rant during a session of the Upper House's constitutional affairs commission when Camano socked him in the mouth and stormed out of the chamber. "He wore me out because I have been putting up with him all year long. He kept shouting without making a single proposal," said Camano.
Tension has been mounting in Congress amidst debate on Argentina's 2011 budget bill, which includes plans to tap central bank reserves to pay debt as well as provide the current administration with broad powers to expand spending in a key election year.
After 14 hours of debate, lawmakers voted to return the 2011 budget to the committee which approved it. The party says the 2011 budget includes projections of inflation, growth, and tax collection that are "implausible." If Congress cannot approve a budget by the end of the month, the 2010 budget will be remain in force -- meaning President Cristina Fernandez's government will still have broad powers to redirect and expand spending.
China's farm minister came to make-up with Argentina last week after many months of strained relations between the two countries over soy oil exports. In a recent bid to bolster trade relations with Argentina, agriculture Minister Han Changfu announced plans to also resume beef purchases, which have been on hiatus since a hoof-and-mouth scare.
There is also speculation in the grain markets that China will also start purchasing corn from Argentina, the world's second biggest producer, though most say trading won't start without a formal bilateral agreement.
With surplus soy and record car sales, Argentina's economy is achieving record growth. But the President Kirchner has decided to try a new tactic to stimulate the economy — declaring new holidays. This long weekend marks the first "Sovereignty Day," in Argentina one of three new holidays President Kirchner declared last month. In a speech last month, the President said that studies show people spend more money during holiday periods, though with 15 official non-working days in the calendar, many wonder how not working ends up being more productive.
Air travel over the holidays has been chaotic this month with the closure of Argentina's main domestic airport, Aeroparque Jorge Newbery. The country's main international airport has been struggling to absorb nearly 20,000 additional travelers and has been plagued with delays, backlogs, flight cancellations, and stranded passengers.
The chaos reached a feverpitch at the very start of the transition, when two pilots from rival unions started a fistfight. The fight reportedly started when one discovered that the other was carrying a camera to document any problems on their flight, and it became so violent that airport police hauled them off the plane in front of their passengers. Both unions proceeded to go on strike, resulting in a complete shutdown of Aerolineas Argentinas, the country's main carrier. But the union strikes didn't stop there. Flight attendants from LAN Argentina, the country's second largest carrier, also went on strike, resulting in additional cancellations. Business has slowly returned to normal, but passengers can expect the unexpected until renovations finish in the Aeroparque in December.
Money: A record soybean harvest and growing exports to Brazil and China has pushed growth in South America’s second-largest economy to 9 percent this year, according to the central bank. Argentina’s trade surplus widened to $1.07 billion in September, the highest in three months.
Argentina is pushing hard to finish negotiations with the Paris Club, an informal association of creditors from Germany, Japan, and the United States, and repay roughly $7.5 billion in defaulted debt, the country's finance secretary announced last week. Money owed to the Paris Club, is one of the last outstanding debts of the 2001-02 economic crisis, when Argentina defaulted on $100 billion in debt to private creditors.
The Argentine government plans to pay its creditors directly from its Federal Reserve, using record surplus in foreign reserves this year. Making payments directly from government coffers to foreign creditors is a controversial move at home that led opposition party members to boycott budget negotiations in Congress.The deal, which could go ahead without intervention from the International Monetary Fund, would help Argentina return to global credit markets and encourage foreign investment.
Credit is starting to become available to Argentina, with Argentine bond yields tumbling 2.66 percentage points since June after President Fernandez completed a $12.2 billion debt restructuring plan. Still, the Argentine government will not return to the international bond market just yet, said Finance Secretary Hernan Lorenzino. With tax revenues and trade surplus at an all time high, the government prefers to finance itself this year and hold out for better credit yields in the coming year.
All the money coming in is making Argentina's peso one of the most attractive "carry-trade" currencies in the world, according to the so-called Sharpe ratio--a gauge that measures investor risk. According to Bloomberg's rank of 35 currencies, the peso posted the biggest drop in risk among emerging economies.
Still Argentina's economic growth is somewhat dampened by the world's third highest inflation rates. The official Consumer Price Index went up 0.8 percent in the last month alone, though private analysts put the increase at 2.4 percent. The rapid increase has sent food and beverage prices skyrocketing and continues to put pressure on Argentine grocery bills. Inflation-savy Argentines became particularly incensed when economy minister, Amado Boudou, said earlier this month that inflation "is only of concern to some members of the upper middle class."
Elsewhere: After neighboring Chile garnered the international spotlight with a successful rescue of 33 miners trapped underground, Argentina had its own underground rescue drama when a three-year-old girl fell down a 100-foot well. Rescue workers spent six hours pulling Vanessa Mamani from the deep shaft in a field in Florencio Varela, in Buenos Aries province. The rescue was broadcast live on Argentine television (of course), with fiber optic cameras showing the little girl trapped at the bottom of the shaft. President Kirchner hailed the rescue a miracle after visiting the tiller in the hospital.
President Kirchner is about to also hail wine Argentina's national drink this week. In a ceremony on Wednesday, Kirchner plans to declare wine Argentina's national drink because " it is an honorable ambassador in the world and represents the pride of the Argentine people" according to Telam. Argentina is the 7th biggest consumer of wine per capita in the world and some have hailed the development of the wine industry in Mendoza, the wine producing region on the country, to be akin to Napa 30 or 40 years ago.